Cairn to seek damages from govt for tax notice

Says it has initiated arbitration for resolution of tax demand linked to 2006 reorganisation of Cairn India, its one-time Indian subsidiary with oilfields in Rajasthan

Contesting a Rs 10,247-crore tax demand raised on its eight-year old internal business recognition, British oil explorer Cairn Energy on Tuesday said it will seek damages from the government for the loss in value of its holdings suffered because of the notice.

The firm said it has initiated arbitration for resolution of the tax demand linked to 2006 reorganisation of Cairn India, its one-time Indian subsidiary with oilfields in Rajasthan.

Cairn Energy, which in 2011 sold majority stake in Cairn India to Vedanta Resources, had to scale back investments as it was barred by the income tax department from selling its residual 9.8 per cent stake.

"Cairn contests the basis of the draft assessment and the notice of dispute is supported by detailed legal advice on the strength of the legal protections available to it under international law. In addition, Cairn will seek restitution of losses resulting from the attachment of its Coal India stake since 2014," it said in it half year earnings.

The firm said it "continues to be restricted from accessing the value of its 10 per cent residual shareholding in Coal India with a market value of $526 million as on June 30. The residual shareholding was valued at $1 billion on December 31, 2013, which was immediately prior to the imposed restriction."